Tibble v. Edison Int’l, — F.3d –, 2016 WL 1445220 (9th Cir. Apr. 13, 2016) (“Tibble II”), marks the Ninth Circuit’s second review of the case after its earlier decision was vacated by the Supreme Court. Tibble v. Edison Int’l, 135 S.Ct. 1823 (2015) (“Tibble I”). Tibble I concerns the commencement of the statute of limitations for breach of fiduciary duty under 29 U.S.C. § 1113, which provides that an action must be brought within six years of “the last action which constituted a part of the breach or violation.”
Continue Reading On Tibble remand, court finds plaintiffs forfeited continuing-duty-to-monitor argument
Another SCOTUS subrogation decision, and another deep dive into equity treatises
There is a lot about ERISA litigation that is hard to understand, but perhaps the most opaque issue is subrogation, which is the law governing when and how plans can recover benefits from participants. It seems that the Supreme Court is constantly changing the rules (while denying that it’s changing the rules), based on its interpretation of old treatises written about procedure in courts that don’t exist anymore.
Continue Reading Another SCOTUS subrogation decision, and another deep dive into equity treatises
Shoes are starting to drop in church plan litigation
The Connecticut Law Tribune reported on Friday that St. Francis Hospital & Medical Center settled a class action lawsuit alleging that its pension plan failed to comply with ERISA because it improperly contended it was exempt as a church plan.
The suit alleged that the plan was underfunded by $140 million. The parties reportedly agreed
ERISA preempts state-required “all payer claim databases” (APCD)
About twenty states, including Vermont, have passed laws requiring all entities that provide health care services to report information to a state agency; these are called “all payer claims databases” or APCDs. Though they may have many purposes, they all generally are intended to enforce a universal and consistent (within the particular state, at least) submission of data that permits study, evaluation, manipulation and dissemination of the data, with an aim of improving health care outcomes and reducing costs. Of course, each state that establishes an APCD likely will have its own requirements, scope and format, which likely will differ in some respects from other states’ APCDs. And because a primary intent of ERISA was to avoid such patchwork, state-by-state regulation of employee benefit plans, a conflict was inevitable.
That conflict came to a head in Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016), and the Supreme Court held that ERISA won, by preempting Vermont’s APCD law.
Continue Reading ERISA preempts state-required “all payer claim databases” (APCD)
ERISA governs plans established by church-related organizations
It is well-established that ERISA contains what is commonly referred to as a “church-plan exemption” which provides that plans established by churches are not required to abide by ERISA’s many rules and regulations. For many years, a number of courts have held that this exemption also applied to plans that were established by organizations that are affiliated with churches, such as schools (think Notre Dame or Georgetown) or hospitals. In two major decisions a couple of months apart, the Third and Seventh Circuits have held that the exemption is not as broad as other courts have concluded. These cases signal a major new area of ERISA litigation.
Continue Reading ERISA governs plans established by church-related organizations
Failure to disclose contractual limitation in ERISA claim denial letter is per se prejudicial
In Santana-Diaz v. Metro. Life Ins. Co., 816 F.3d 172 (1st Cir. 2016), the court held “that ERISA requires a plan administrator in its denial of benefits letter to inform a claimant of not only his right to bring a civil action, but also the plan-imposed time limit for doing so. Because MetLife violated this regulatory obligation, the limitations period in this case was rendered inapplicable[.]” The First Circuit thus reversed the district court, which had held that the failure to provide notice was not dispositive because plaintiff was aware of the limitation through the group policy.
Continue Reading Failure to disclose contractual limitation in ERISA claim denial letter is per se prejudicial
Unpaid employer contributions cannot be plan assets; debt is dischargeable in bankruptcy
Bos v. Bd. of Trustees, 795 F.3d 1006 (9th Cir. 2015), involved the owner of a company that participated in a multi-employer pension plan. Because the owner had full control over the company finances, he was personally responsible for making the required contributions. Moreover, he signed a promissory note for some $360,000 in payments that the company had failed to make. Then he filed bankruptcy. The bankruptcy court and the district court held that the debt was not dischargeable, because it was incurred due to the debtor’s “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” 11 U.S.C. § 523(a)(4). To so hold, the lower courts had concluded that the unpaid contributions were plan assets, and plaintiff’s control over those unpaid contributions made him a fiduciary, which gave rise to non-dischargeability.
Continue Reading Unpaid employer contributions cannot be plan assets; debt is dischargeable in bankruptcy
Preferred provider agreements do not support ERISA claim
In Penn. Chiro. Assoc. v. Independence Hosp. Indem. Plan, Inc., — F.3d –, 2015 WL 5853690 (7th Cir., Oct. 1, 2015), two chiropractors who had signed preferred provider agreements with an insurer claimed that the insurer violated ERISA in determining payments to them. In particular, plaintiffs claimed that the insurer had improperly recouped overpayments without holding a hearing.
As the court described the function of the agreement: “Providers bill the insurer directly and do not know (or care) whether a given patient obtained the coverage as part of an ERISA welfare-benefit plan or through some other means, such as an affinity-group policy or an insurance exchange under the Affordable Care Act.”
Continue Reading Preferred provider agreements do not support ERISA claim
SPD can be governing plan document when there is no actual plan
Bd. of Trustees v. Moore, 800 F.3d 214 (6th Cir. 2015), considered whether a summary plan description (SPD) that was the only document containing a subrogation provision was a binding plan document. The Board of Trustees of the National Elevator Industry (NEI Board) established a health benefits plan, pursuant to two relevant documents. The first was a Trust Agreement between the NEI Board and participating elevator companies, which provided for the establishment and funding of a health benefit plan. The Trust Agreement did not, however, contain any details of a health plan. The NEI Board never created a plan document, but did create an SPD, which details the terms of the plan, and contains a subrogation provision. The Plan’s director of health claims administration testified that the SPD constituted both the plan and the summary of that plan.
Continue Reading SPD can be governing plan document when there is no actual plan
Sixth Circuit criticizes administrator for not allowing treating doctors more time to return calls
Shaw v. AT&T Umbrella Ben. Plan No. 1, 795 F.3d 538 (6th Cir. 2015) concerned denial of plaintiff’s claim for disability due to chronic neck pain. The district court affirmed the denial, but the 6th Circuit reversed, finding the determination arbitrary and capricious.
The court took issue with much of the claim